This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: Explain what effect an increase in the future expected interest rate will have on the IS curve and ... (Read 81 times)

mp14

  • Hero Member
  • *****
  • Posts: 534
on: Jun 30, 2018
Explain what effect an increase in the future expected interest rate will have on the IS curve and LM curve in the current period.
 
  What will be an ideal response?

Question 2

Securitization is a process of asset transformation that involves a number of different financial institutions working together. These financial institutions are known collectively as the
 
  A) transformers.
  B) amalgamation.
  C) movers and shakers.
  D) shadow banking system.


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

gstein359

  • Sr. Member
  • ****
  • Posts: 293
Reply #1 on: Jun 30, 2018
Answer to Question 1

An increase in the future expected interest rate will cause a reduction in the present value of future disposable income and, therefore, human wealth. This causes current C to decrease and the IS curve to shift left. The increase in the future expected rate will also cause a reduction in the present value of future profits. This will cause a reduction in investment and another leftward shift in the IS curve. The LM curve will not be affected.

Answer to Question 2

D


mp14

  • Member
  • Posts: 534
Reply 2 on: Jun 30, 2018
Gracias!

Liddy

  • Member
  • Posts: 342
Reply 3 on: Yesterday
Wow, this really help

« previous next »
 

Did you know?

When taking monoamine oxidase inhibitors, people should avoid a variety of foods, which include alcoholic beverages, bean curd, broad (fava) bean pods, cheese, fish, ginseng, protein extracts, meat, sauerkraut, shrimp paste, soups, and yeast.

Did you know?

Vaccines prevent between 2.5 and 4 million deaths every year.

Did you know?

Studies show that systolic blood pressure can be significantly lowered by taking statins. In fact, the higher the patient's baseline blood pressure, the greater the effect of statins on his or her blood pressure.

Did you know?

Amoebae are the simplest type of protozoans, and are characterized by a feeding and dividing trophozoite stage that moves by temporary extensions called pseudopodia or false feet.

Did you know?

Illicit drug use costs the United States approximately $181 billion every year.

The titration curve of acetic acid The titration curve of acetic acid
Bell Curve Joke Bell Curve Joke
(a) The connection required to test a Halleffect sensor. (b) A typical waveform from a Hall-effect ... (a) The connection required to test a Halleffect sensor. (b) A typical waveform from a Hall-effect ...
Consider the production function ( ) 0.5 0.5 Y = AK L . Suppose both saving rate (s) and the ... Consider the production function ( ) 0.5 0.5 Y = AK L . Suppose both saving rate (s) and the ...
A 1000-kg car is slowly picking up speed as it goes around a horizontal unbanked curve whose ... A 1000-kg car is slowly picking up speed as it goes around a horizontal unbanked curve whose ...
Position effect variegation of eye color in Drosophila Position effect variegation of eye color in Drosophila
Video: Hemodynamics Animation

For a complete list of videos, visit our video library